by fannie mae [FNM] to Joe, the owner of the house, everyone wants to quickly hand over that hot potato called guilt. I want to be different. I’m going to hold tight to that potato, and while it burns my hands I’m going to confess that this whole economic crisis is entirely my fault. Then borrowers can stop blaming lenders. Main Street can stop blaming Wall Street. Government politicians can leave the corporate elitists alone and continue to let them play Monopoly for real money. But, all of you should just take a couple of minutes to listen while I confess and tell you what I did to cause this whole debacle.
I’m Joe the Contractor, Joe the Plumber filled in for me on a couple of jobs. I’m from the corrupt little state of Rhode Island, where it’s all about “lobsters and mobsters.” [sic] I started my business in 1992, with zero capital, a truck that was a year older than my wife, and a milk crate full of junk tools. Oh yeah, a couple of other important tools of the trade that I fully owned in those days were ambition and high hopes. Those things, not even five years after I started, got us a home of our own, a middle class income, and a well established small business making about $750,000.00 gross a year, with three employees – jobs I created, really, not as a politician says.
Then came the “gangsters”. I started getting fucked left and right by crooked people in power, even if I wasn’t officially part of the mob. One of these shower bags, “The Prince of Providence” ended up in jail. Another, I had him carried on a stretcher the day he tried to extort money from me for the second time (he succeeded the first time). I fired my crew, sold my tools, closed my business and went fishing… commercial fishing, deep sea, guess what? -“lobsters”. It’s hard work, even compared to construction. You would be surprised how this industry is so over-regulated that a fisherman can barely make a living, while the mortgage industry is so lightly regulated that some idiotic loan officers can make a living with much less effort.
So I became a jerk loan officer. For once in my life, my time was on point, and during the refinancing boom that ran concurrently with the subprime fiasco, I was making ten to fifteen grand a month… doing refinances, not blowing money. people’s lives by cheating them on those subprime. -first offers. I also did not make any maximum premium offer. That’s a deal where the loan officer refinances your own home or your friends’ home at the highest rate, gets the highest commission, and then uses that commission to pay costs and escrow, and even a couple of down payments. of principal and interest, therefore only making one mortgage payment per quarter, and at the same time screwing the banks by refinancing four times a year. Greed and corruption on all levels, you have to love it.
Rates started to go up, so my refinancing business started to slow down, and not to sound like sour grapes, but I was ready to trade in my tie for a utility belt anyway. I missed working with the kind of people we know, thanks to Sarah Palin, like Joe Six-Pack, people with more class and less money than Patrick Trust-Puppy. I didn’t want to go back to the hiring scene that I literally fought my way out of. But, he still wanted to build. So this is what I did, and it was this next move that caused the unprecedented drop in artificially inflated values found in the housing market, which by domino effect brought down the banks and insurance companies, and will soon kill retail, except for immortal zombies, walmart[WMT]and lead to a depression like in 1929 when people bought inflated stocks at a 10% discount.
I took $100,000.00 of equity from our house, an additional construction loan, and built a house on speculation. No client with color options, no deadline with liquidated damages, no certified payroll, no bribes to receive final payment, no mobsta, no lobsta. All I had to worry about was a drastic drop in home values. I planned for a worst case scenario of 20% depreciation. This was the real life scenario: In the 70 weeks it took to build this house virtually single-handedly, it lost over $140,000.00 in value. So basically I worked hard for a negative $2,000.00 a week.
As my wife pleaded with me not to do this project and put the house we live in at risk, and we worked and prayed so hard to get it done, I heard another voice screaming in my other ear. This voice said, “Joe, you know that if you go ahead with this venture, you’re going to bring the housing market completely down.” He also said, “You saw firsthand how these home values got so inflated. Loan officers have appraisers raise values to get the loan through underwriting. Then when the buyer hears what homes are being appraised on , they think that’s what they’re really worth. Of course, their real estate agent agrees, after all, the higher the price, the higher the commission. So the buyer figures out why not pay what the house is worth of our dreams, after all, the bank said we can pay and they wouldn’t lend us the money if they thought we couldn’t pay it back. The deal is made at the price based on the inflated appraisal, and then that sale price becomes the compensation for the next inflated appraisal.”
I argued with my wife, to the point that we parted ways and I spent five cold months living in the foundations of this house that I continued to build. I also argued with that voice in my head. I explained how I had made loans to people with properties abroad, in Australia and Portugal, and they reported the same double-digit appreciation with properties in those countries. “It’s happening all over the world,” I reasoned. It must have something to do with the fact that there are now seven billion people on earth. Also, if property values are what they are, then my net worth is around $300,000.00. – not bad for a guy who started out just ten years ago with a negative net worth of $10,000.00. This is America. Isn’t this what is expected after ten years of constant, honest and hard work?
So there you have it, I ignored my wife and ignored the voice… to my own peril and everyone else’s. By the way, this was the same voice that told me a few years earlier “strangle that crook until he turns purple, then drop him and stomp on his head. You’ll only get a couple of weeks in jail and a year of probation – he la memory will last a lifetime. You’ll even get your final payment without having to grease anyone” That damn voice hit the nail on the head, that’s exactly what happened. If only I had listened this time too, we wouldn’t all be in this mess that is going to cost us well over a trillion dollars to bail out of. Aren’t they already asking for more? It’s all my fault… and I’m sorry.
Now the voice tells me that as soon as I, Joe the contractor, along with Joe the plumber, and our friend Joe Six-pack sell all our houses short, or put deeds in place, or just get repossessed, then things will get better… For Patrick Trust-puppy. Because the government gave all that tax money to the banks, warning them to be sure to lend it and not hoard it. And lend it to Patrick Trust-cub, at a low interest rate, so he can buy these now undervalued properties. Then he’ll rent them to us, if we pass the credit check. He will hire us somewhere between minimum wage and living wage to fix them, since he gets credit along with the politicians for creating jobs with the bailout money. We will work eighty hours a week because we have that American work ethic, the best in the world. And with enough ambition and high hopes, after about five years, our credit will be good enough again, and maybe we’ll have some money for a down payment, so we can buy these properties off the jerk for what they should have been worth. . throughout, calculating an appreciation of 4% per year. Of course, this will give Mr. Trust-puppy a 100% return on his investment on our tax dollars, and about a 1000% return on his out-of-pocket investment, because there’s no investment like real estate when it comes to to buy on margin. …And the whole silly cycle will start again… Unless it causes the Second Great Depression, followed by the Great Tribulation.